Contractor stole $40K
Member since 2021 · 9 posts · 3 votes
Contractor stole $40K
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Rogelio M.Pro Member
Investor · San Antonio, TX · Member since 2008 · 99 posts · 36 votesYou will have a tough time recovering the funds (although NOT impossible). File a complaint with your jurisdiction's law enforcement agency. Make certain that you are assigned a detective that is knowledgeable in handling financial fraud investigations. Thereafter, if the criminal investigation is handled correctly, be prepared to follow up with the district attorney's office. From detecting the incident, to the investigation, to following up with the district attorney and court could take two to three years. Going forward, make certain that you perform a criminal background check on ALL contractors .... if the pattern holds, I am certain that your contractor has a criminal background involving prior theft and/or financial fraud. Move quickly. Your financial institution should have records showing that it was your contractor that withdrew the funds.
27 Replies
- 5yRogelio M.Pro MemberInvestor · San Antonio, TX · Member since 2008 · 99 posts · 36 votes
You will have a tough time recovering the funds (although NOT impossible). File a complaint with your jurisdiction's law enforcement agency. Make certain that you are assigned a detective that is knowledgeable in handling financial fraud investigations. Thereafter, if the criminal investigation is handled correctly, be prepared to follow up with the district attorney's office. From detecting the incident, to the investigation, to following up with the district attorney and court could take two to three years. Going forward, make certain that you perform a criminal background check on ALL contractors .... if the pattern holds, I am certain that your contractor has a criminal background involving prior theft and/or financial fraud. Move quickly. Your financial institution should have records showing that it was your contractor that withdrew the funds.
- Pomona, NY · Member since 2016 · 375 posts · 217 votes5y
@Phebia Philpot you need to give more specifics, where did this occur? How did the bank allow him to steal 40k ? 40k is fraud and you need to file a police report asap, I suggest hiring an attorney immediately
- Member since 2021 · 9 posts · 3 votes5y
@Rogelio M. YES. He has a very good criminal history with at least one charge of theft by deception. We have heard he is on probation so we are in the process of pressing charges but I’m not sure how any of that will help us recover any money. After all, you can’t bleed a turnip.
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes5y
Your issue should be with the bank first . Unless you gave him access to the money . then contact the State agency that licenses contracting companies , they will help , you may also want to file against his business insurance . Now if you hired " Chuck in a truck " you may be out of luck .
- Member since 2021 · 9 posts · 3 votes5y
@Michael Gessner the bank allowed him to withdraw over the budget that was allocated for each part of the construction process. They were supposed to conduct inspections making sure work had been done before giving more money. They didn’t even do an initial inspection until after we were over budget $40K. We do plan on suing the bank, just waiting to speak to a couple more attorneys to see our best course of action. Until then, we are having to refinance to take out an extra $70K on our home loan to get it finished. Once all is said and done we might have to turn around and sell anyhow because our payment will be so expensive. We are aware it may take several years to receive money if any.
- Member since 2021 · 9 posts · 3 votes5y
@matthewpaul yeah I’m not sure if he is even licensed, so I’m not sure if that would help but I sure will try anything to get ANY money back that we can. Yes, I’m sure the bank is at fault but of course they will not take responsibility for it, so unless we can just save a ton with the builder coming in to finish it by getting deals from people that pity us, then we will be in a lawsuit against them.
- 5yRogelio M.Pro MemberInvestor · San Antonio, TX · Member since 2008 · 99 posts · 36 votes
Originally posted by @Phebia Philpot:
@Rogelio M. YES. He has a very good criminal history with at least one charge of theft by deception. We have heard he is on probation so we are in the process of pressing charges but I’m not sure how any of that will help us recover any money. After all, you can’t bleed a turnip.
@Phebia Philpot ... so you have a dual track to possibly follow: Civil and/or Criminal ... each with advantages and disadvantages. Civil Court is better suited for recovery, but you will incur heavy expenses in hiring and attorney. Criminal Court is not specifically set up for recovery, rather for punishment; although, a criminal court CAN order some order of form of "restitution". Thus, by following the criminal rout, you could hold the transgressor to account, but without necessarily achieving an optimal recovery. You mentioned that the contractor is currently on probation for a prior incident; with a properly prepared case by the assigned investigator / detective, and with the preponderance of evidence on your case, a prosecutor could petition the Court to revoke the contractor's probationary status. Consider filing a complaint with the BBB, and the local and State contractor licensing boards. If there is a local entity that issues permits for rehab work, consider them as well for a complaint. No option is ideal; perhaps it is time, though, to see the contractor be held to account. It is best to perform due diligence on a contractor BEFORE hiring them. There is no better way to expose one's risk in hiring a contractor than to detect that the contractor has a background in committing theft, financial fraud or any other crime involving deception.
- Member since 2021 · 9 posts · 3 votes5y
@Rogelio M. our attorney advised us to finish the house and then see if the damages we occur money wise is worth going to court because we didn’t want to end up in a bigger hole than we already are, so I get that. I’m hoping he will be made to make monthly payments or something, but I don’t expect it. I will look into filing with those companies/bureaus. Thanks.
- Flipper/Rehabber · Houston, TX · Member since 2020 · 87 posts · 59 votes5y
@Phebia Philpot What state is this? It sounds like the bank didn’t follow the terms of the agreement to let him get this much $ without your approval or without completing inspections. They must be held accountable. Read carefully the terms & if they missed anything, they are responsible. Period. Maybe the contractor created false documents, but inspections would have avoided this situation. Did you put him on an account to pull money as needed?
Hope not.
- Member since 2021 · 9 posts · 3 votes5y
@Shelby LeBlanc KY. We have a copy of their blank checklist they use and they are supposed to conduct at least 3 inspections where they document dates and what has been done. He was allowed to go to the bank and request the funds, we “verbally” said he could have whatever the draw was. HOWEVER, they allowed him to draw over the budget for each step on the checklist without checking progress. So, we asked our lawyer how us verbally authorizing would effect us and he did not think it would matter much because nothing was in writing and regardless they failed to inspect for over 2 months. We were probably foolish for authorizing the money but at the time we had no checklist provided. We had no idea what he needed and why. The bank did not make him produce any invoices or receipts. Plus she would call us on speakerphone while he was in there and ask us if it was okay. What were we supposed to say, no, and piss off our builder? We were just trying to get him to continue working because we had waited at that time over 2 months for trusses. Of course we were ignorant to what was going on because we just truly did not know what was going on. But, the bank should’ve stepped in before he was allowed all the money.
- Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes5y
If you are having trouble finishing the house due to financial strain, do not sue anyone until you are in a better financial position, especially not the bank. Legal costs will bury you.
Put priority #1 on getting that house done and sold, or refinanced, whatever gets you back on stable ground. Then you can go after people to recoup your losses. However keep all notes, records, photos, screenshots, emails, text messages etc in the meantime.
Until then, know you are not alone and I am sorry this happened to you. Getting ripped off in this game is unfortunately too common. Here's a thread about something similar happening here in my city, this person got ripped off by TWO different bad contractors and a bad wholesaler, and lost a bunch of money:
- Member since 2021 · 9 posts · 3 votes5y
@Account Closed thank you. I believe that is our plan. The second contractor coming in to finish it is someone we trust fully. Had I know he was a builder I never would have hired the other guy. He is trying to help us by charging us cost plus 10%. We are trying to get deals anyway we can to save money. So, maybe we won’t end up having to borrow as much as we think, and then we can do legal proceedings after that is over. This is what our lawyer advised us to do as well. I did review the post you linked and as bad as I hate it it makes me feel a little better to know that we aren’t the only ones that this has happened to. Thanks.
- Contractor · Member since 2020 · 91 posts · 64 votes5y
@Phebia Philpot who on earth gives a contractor access to their bank account? This can’t be real. Do you mean you payed him too much deposit money, or that he pulled his own money out. Nobody would give a contractor access to their bank account... or please educate me, somebody how this is common in some parts of the world. Do you mean he asked you for too much money and you paid him, or that you put a contractor’s name on your bank account and said pull out as much as you need and pay yourself when your done. I just can’t make logical sense of this the way it’s described. Please help.
- Member since 2021 · 9 posts · 3 votes5y
@Account Closed He was allowed to come to the bank and ask for draws from the loan officer. We would verbally authorize the money and he would take the draw. Our bank never advised us to do any differently so we had no idea that this was going to transpire because we thought THEY would keep check on progress before they release more draws, which obviously that didn’t happen. We already feel dumb enough that this even happened without you being rude. We are asking for advice here, not degradation.
- Contractor · Member since 2020 · 91 posts · 64 votes5y
@Phebia Philpot cost to me plus 10%? Never heard of this, as this makes no logical sense on bidding. A contractor will total their materials, labor and overhead generally. The labor price should be based on their estimation of how much time it will take them to complete the work. So if the trusses cost $6,000 , they install them for $600 labor? And if the plywood goes on sale for $10 a sheet, they make 1/3 of what they would have made? If you have a contractor charging 10% over cost this is a laughable strategy and a great way to be taken advantage of again. They will order double the materials, install, return the other half, show you the original receipt and you could easily be charged 10% on double the actual materials. It just doesn’t work this way. You need to agree on a price from a real contractor before they perform the work or a time and material deal that could get loose with your situation. You’re better off just watching YouTube and finishing it yourself.
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes5y
I would hire a lawyer and immediately sue the bank for negligence. They have an insurance policy that will pay out or at least settle with you getting small payout. File criminal charges against contractor but it's unlikely to get you money back. The bank's insurance is most likely option.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Phebia Philpot:
@matthewpaul yeah I’m not sure if he is even licensed, so I’m not sure if that would help but I sure will try anything to get ANY money back that we can. Yes, I’m sure the bank is at fault but of course they will not take responsibility for it, so unless we can just save a ton with the builder coming in to finish it by getting deals from people that pity us, then we will be in a lawsuit against them.
Sorry to be blunt here but you hired this contractor and do not know if he is licensed? Sounds like you failed in your due diligence first and foremost and let that be a lesson to never repeat!
Moving forward, get an attorney and file a law suit against the contractor AND the bank. If your story here is accurate, the bank failed to protect you and follow the contract, they are now liable (I would assume as I am not an attorney). You should also file a claim with the contractor's board (if he IS licensed).
- Member since 2021 · 9 posts · 3 votes5y
@Will Barnard the story is true. The bank couldn’t even locate a draw they had given him and told us it was their mistake. Then while my husband waited an hour in their office, they located it. I know the bank should be responsible at least partly I just don’t know how far we will get without exhausting all of our extra money on legal fees.
- 5yIan WalshBusiness MemberLender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
I have seen this before. It is hard to get that money back unless they are a well established firm and your contract with them clearly proves they didn't do the work. It is likely just an expensive lesson.
- Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes5y
I would immediately contact the state contractors board and if nothing else report this loser.... Are you doing this rehab out of state? If so I would also hire someone trustworthy to be your eyes on the ground - doing rehabs/renos without being there seems to me to be an almost impossible thing to do given how hard it is to manage contractors and subs....
What I would be doing is calling up the food chain at the bank until you talk to someone in power that can figure out what happened. My guess is that you both are at fault, but IMO you should at least get half back from their negligence......(altho i would never trust a bank to do my project management)
Good luck....ETA: does this guy have a contractors License? He must for the bank to of approved him?? If so file a claim at the contractors board so you can get access to his bond/insurance.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes5y
Originally posted by @Phebia Philpot:
@Account Closed He was allowed to come to the bank and ask for draws from the loan officer. We would verbally authorize the money and he would take the draw. Our bank never advised us to do any differently so we had no idea that this was going to transpire because we thought THEY would keep check on progress before they release more draws, which obviously that didn’t happen. We already feel dumb enough that this even happened without you being rude. We are asking for advice here, not degradation.
If you authorized the draws, I doubt you'll have any claim against the bank. Their inspections are to protect their own interests. They want to ensure that the work was done before paying out funds, but that's to protect themselves in case they have to foreclose. For example if they gave out 100k to build a house and you disappear with the money, they won't have any asset to foreclose against. It'd essentially be a signature loan vs. mortgage. Someone at the bank certainly was negligent in not performing inspections, but that's only negligent towards themselves.
- 5yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Phebia Philpot how did the bank let him have it?
Irish Jones Realty4.947 Reviews - 5yMatthew Irish-JonesBusiness MemberReal Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
@Phebia Philpot did you check his license, insurance, workers comp before hand?
We’re you signing off on bank disbursements? Usually a contractor cannot pull funds. They go through you, and you pay the contractor.
Irish Jones Realty4.947 Reviews - Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes5y
Originally posted by @Phebia Philpot:
@Rogelio M. our attorney advised us to finish the house and then see if the damages we occur money wise is worth going to court because we didn’t want to end up in a bigger hole than we already are, so I get that. I’m hoping he will be made to make monthly payments or something, but I don’t expect it. I will look into filing with those companies/bureaus. Thanks.
I would follow your attys advice
or find another Atty - Contractor · Salt Lake City, UT · Member since 2018 · 2 posts · 0 votes5y
@Phebia Philpot
If the bank didn’t do an inspection they should be held accountable. First contact your bank/lender and find out why they didn’t do an inspection? And most importantly hire an attorney, this will light a fire under them and force them to give you answers. Read your contract between you and the bank/lender.
Good luck!
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